McGuinty says Grits can cut and spend

TORONTO —-Premier Dalton McGuinty insisted Thursday that he’s serious about slaying Ontario’s massive deficit, while forging ahead with new policies that will cost more than half a billion dollars a year.

McGuinty expressed confidence that the governing Liberals will be able to implement two of their key campaign promises, despite being one seat short of a majority.

The premier has promised a new grant to reduce tuition for most post-secondary students — at a cost of $423 million a year once fully implemented — and a home renovation credit for seniors that will cost $136 million a year.

“This is good for families, it’s good for young people and it’s good for the economy all at the same time,” McGuinty said after touting the tuition break at a Toronto high school.

But the combined $559-million price tag far exceeds the $325 million that the Liberals say would disappear from the provincial treasury if they bow to opposition demands to slash the HST on home heating bills.

The Progressive Conservatives are backing an NDP private member’s bill to remove the provincial portion of the HST from home heating, which the Liberals say will cost too much and jeopardize key government programs and services.

Unlike the Liberals, the NDP have found a way to finance their proposal: halting planned corporate tax cuts, said NDP Leader Andrea Horwath.

“We’re pretty clear about where we would get the money to pay for that initiative,” she said. “I don’t hear Mr. Duncan telling us where they’re getting the half a billion dollars for their initiative.”

McGuinty said he’ll find a way to finance the tuition break and tax credit without borrowing more money, but didn’t provide any details.

“It will all come out in the budget,” he said.

Paying for the two promises will likely require the Liberals to make cuts in other areas. With the deficit expected to reach $16 billion this year alone, the premier said he plans to follow a recommendation from economist Don Drummond to limit growth in spending to one per cent a year until the deficit is eliminated in 2017-18.

Horwath, who spoke to Drummond on Wednesday, said he also plans to make some recommendations about the province’s 14 Local Health Integration Networks, which the Liberals have vowed to keep.

Drummond agreed that the LHINs “are not operating the way that they should … that the model that the government has put into place simply isn’t working,” she said.

Despite the cost-cutting ahead, McGuinty argues his proposals to reduce tuition and give seniors a tax credit are smarter investments than an HST cut, because it will build a stronger workforce and bolster Ontario’s economy.

University students will start saving $1,600 annually and college students $730 starting in the new year, he said.

Government officials said the tuition break doesn’t require legislation and will be introduced in the next provincial budget. They’re also looking at ways to provide the support to students, such as a rebate, to meet the Jan. 1 deadline.

However, the government plans to introduce a bill for the home renovation tax credit “early” in the new legislative session, which begins next week.

Neither the Conservatives nor the NDP would say Wednesday whether they’ll support the tuition break.

“We need to know how it’s going to be paid for,” said Tory Vic Fedeli.

There would be a big price to pay if the two parties oppose the measure by using their combined clout in the legislature to defeat the budget: another election.

But McGuinty shrugged off the new alliance between the Tories and NDP on the HST, saying he’s certain all three parties will still be able to find common ground in a minority parliament.

“There are going to be some differences — how could there not be?” he said. “Our political system is founded on a healthy partisanship.”